August 2019 Newsletter to Clients

Enjoy this month’s edition that features an update to the Equifax breach in 2017, news of the recent Capital One breach and insight on the Federal Reserve’s decision to cut interest rates…

Equifax Data Breach: Were you affected by the Equifax data breach in September 2017? If so, you may be eligible for a settlement. The Federal Trade Commission announced that Equifax has agreed to pay at least $575 million to help people whose sensitive personal information was exposed. If you are affected you may be eligible to file a claim at www.EquifaxBreachSettlement.com. Unsure if your information was exposed, then use the Equifax data breach look-up tool at www.EquifaxBreachSettlement.com/eligibility. For more information regarding the settlement go to the FTC’s page, www.ftc.gov/Equifax.

Capital One Breach: On the heels of Equifax’s settlement comes an FTC announcement that Capital One exposed the personal information of 106 million of its credit card customers and applicants. We recommend clients check their credit report and place a freeze on credit accounts. To obtain free credit reports, simply visit www.annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form, which can be found at www.consumer.ftc.gov/articles/pdf-0093-annual-report-request-form.pdf, and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

Additionally, you can call the toll-free fraud number of any one of the three nationwide credit bureaus and place an initial or extended fraud alert on your credit report.

• Equifax: 1-800-525-6285; Equifax Information Services LLC, P.O. Box 105069, Atlanta, GA 30348-5069
• Experian: 1-888-397-3742; P.O. Box 9532, Allen, TX 75013
• TransUnion: 1-800-680-7289; Fraud Victim Assistance Department, P.O. Box 2000, Chester, PA 19016

For additional information on the Capital One breach visit: www.capitalone.com/facts2019/.

Federal Reserve Interest Rate Cut: On July 31 the Federal Reserve cut interest rates for the first time in a decade. As you probably know, the Fed’s main jobs are to maintain maximum employment and keep prices steady. For the Fed, steady prices means inflation of about 2%. Part of what drove this interest rate decrease is inflation hasn’t met their 2% target since they formally established it in 2012. Reducing interest rates increases the supply of money in the economy and, in theory, promotes growth and inflation.

Despite very low unemployment rates and strong consumer spending, the Fed has also cited uncertainty about global economic growth as justification for the rate cut. In our global economy, U.S. companies don’t operate just domestically and the fear is that slow international growth could impact our economy here at home. So, they have termed this their “insurance cut” in an effort to prod growth to continue.

So, what does this mean for our investments in stock and bond mutual funds? For our bond funds, the rates set by the Fed have their biggest impact on short-term bonds. Longer-term bonds are less affected by the Fed’s policies than they are by growth and inflation expectations. Our short-term funds include Lord Abbett Short Duration (LLDYX and LALDX), while our medium-term bond funds include Loomis Sayles Bond Fund (LSBNX and LSBDX). The total returns (price increases plus dividends) of these funds have been quite good so far this year and we don’t expect major price or yield fluctuations from the Fed’s interest rate move alone.

As for stock mutual funds, the S&P 500 has performed amazingly well so far this year. While the market initially reacted negatively to the Fed’s cautiousness about future rate decreases this year, we believe minor moves such as this are of minimal consequence for stocks over the long-term.

Thank you for your continuing confidence.

Past performance is no guarantee of future results. The opinions expressed are those of Moneywatch Advisors, Inc. and are no guarantee of the future performance of any particular fund. This information is for educational purposes only and is not intended as investment advice. Please consult your financial advisor for more detailed information or for advice regarding your individual situation.